Unformatted Attachment Preview
COLEMAN ART NUSEN
601
EXHIBIT 4 Personal Membership Categories and Revenues by Year, 2000-2004
Membership Category_Amores
Number of Members
2003
2002
2001
Regular
2000
$50
1362
Associate
12.248
13.83
16 353
$100
17.-58
2.596
Collector
2558
2.576
2 565
$250
364
Patron
461
$500
102
85
65
0
Partner
$1.500
004
638
679
-41
Director's Club
682
$5.000
Total membership
91
S6
17.429 15.815
17370 20.131 21.559
Membersbig Revenue
2004
2003
2002
2001
2000
Regular
$50
$039.663 $556.120 $611.86% $600.185
$662.631
Associate
$100
234,871 232 398 249.312 244,961 242981
Collector
$250
81,415 76.987
97.44 108.32 105.840
Patron
$500
48.100 44.293
35.500
0
0
Partner
$1.500
815.606 958-19 968.239 1.187.728 1.041.898
Director's Club
$5,000 406,673 405.016 458.938 282 219
0
Total membership
$2.298, 19 $2.334.583 $2.485.352 $2451.638 $2,079330
revenuen
"The number of memberships times the dollar value does not equal the amounts given as the membership revenue, since
some memberships are given gratis
The inconsistency between these figures and the figures shown on the income and expense satement is due to memberships
given gratis
members that fall into the $1.000 category are given 25 employee memberships
those in the $10,000 category are given 250 such memberships.
The direct cost of benefits provided by CAM to personal and corporate mem-
bers was estimated by the museum's accounting firm. CAM was required to do
this because of income tax laws that limited the deductibility of membership to
the difference between the direct cost of membership and the value of the ben-
efits received. The estimated total cost of member benefits provided exceeded
$1 million each year since 2000. An itemized summary of benefit costs by cat-
egory in 2004 follows.
Category
Regular (50)
Associate ($100)
Collector ($250)
Patron ($500)
Partner ($1.500)
Director's Club ($5,000)
Corporate (all categories)
Total cost
Benefit Cost
$631,016
81.903
61.135
39,628
99.567
15.975
125.576
$1.057.800
The estimated cost of benefits exceeds the membership expense shown in Ethibit 2 because the
cost of publications and other items is included in this estimate. These costs are allocated across se
cral different items in Exhibit 2.
CHAPTER 9 MARKETING STRATEGY REPORMULATION: THE CONTROL PROX
COLEMA
The principal cost items in each category were (1) free admissions to
hibits; (2) parking: (3) the monthly calendar of museum activities, exhibits, and
events; and (4) discounts at the Skyline Buffet restaurant and gift shop.
Member Recruiting and Renewals "Recruiting new members and renewing
and renewals occur at the museum during visitation, the recruitment effort mostly
revolves around mail, telephone, and personal solicitations. Mail and telephone
solicitations focus primarily on recruiting and renewing personal memberships
are used to recruit and renew personal memberships in the $500 to $5,000 $21.
in the $50 to $250 categories. Personal solicitations by the Museum Association
existing members is a major undertaking," said Mercer. While some
recruiting
egories and corporate memberships.
CAM uses mailing and telephone lists obtained
from other cultural organiza.
tions and list agencies. These lists are culled to target zip codes and telephone
prefix numbers. Mail solicitations include a letter from the museum director, a
brochure describing the museum, and a membership application form. Tele
phone solicitations include a follow-up brochure and application form.
The economics of direct-mail solicitation are illustrated below, based on an
August 2004 mailing considered typical by Mercer,
Total mail solicitations
148,530
Total memberships obtained
1,532
Response rate
1.03%
Total membership revenue $84,280.00
Total direct-mail costs
$66,488.80
Two direct-mail solicitations of this magnitude are conducted each year.
The solicitation process for personal memberships in larger dollar categories
and corporate memberships relies on personal contact by CAM volunteers and
corporate member executives. Prospective members are identified on the basis
of personal contacts and from the lapsed membership roster, the society page,
other organizations' membership lists, and lower-membership-level lists. Once
identified, these prospects are approached on a one-to-one basis. An initial letter
is sent introducing the prospect to the museum. This first letter is followed by
a personal telephone call or another letter inviting the prospect to an informal
gathering at the museum. At the gathering, the prospect is introduced to other
members and is asked directly to become a member,
Renewal efforts include mail, telephone, and Internet solicitation. In addi-
tion, membership parties, special previews, and special inserts in the monthly
calendar of CAM activities are used.
Museum records indicate that 70 percent of the $50 members do not renew
their membership after the first year. Among those that do, 50 percent renew in
cach successive year. Members in the $100 to $500 categories have a renewal rate
of 60 percent
, and members in the $1,500 and $5,000 categories have a renewal
rate of 85 percent. Mercer believed that less than 10 percent of personal members
who do renew their membership increase the dollar value of their membership. Re
newal rates among corporate members is about 75 percent, regardless of category
CONSIDERATIONS FOR 2005
Ashley Mercer and Donald Smith met to discuss measures they might recommend
Smith noted that at an earlier meeting with his staff, personnel reductions were
to the Board of Trustees to reverse the deteriorating financial condition of CAM.
603
discussed. Specifically, he felt that a 10 percent reduction in personnel and admin-
istration costs was possible. Furthermore, his staff estimated that the appropria-
tion from Fannel County, contributions, grants, investment income, endowment
earnings, and other income would be 15 percent below 2004 levels. A best
guess" estimate from the director of collections and exhibitions indicated that
special exhibitions and events would generate revenues of $1.2 million and cost
$675,000 in 2005. Parking revenues and expenses resulting from nonmember visi-
tors would remain unchanged from 2004. Rough budgets for education programs
indicated that an expenditure of $500,000 for 2005 was realistic, given planned
efforts. Smith said that changes in other auxiliary activities for which he was re
sponsible, namely the Skyline Buffet restaurant and gift shop, were not planned.
Mercer was impressed with the attention Smith had already given to the mu-
seum's situation. She too had given consideration to matters of museum image,
Visitation, and membership prior to the meeting. Unfortunately, an earlier meet-
ing with her staff had raised more issues than hard-and-fast recommendations.
Staff suggestions ranged from implementing a modest admission fee of $2 per
adult (with no charge for children under 12 years old) to instituting student (ages
13 to 22) and senior citizen (60 and older) memberships at $30. The need for
institutional advertising was raised, since CAM had been promoting only spe-
cial exhibitions and events. Other staff members said that the benefits given to
members needed to be enhanced. For example, raising discounts at the Skyline
Buffet and gift shop to 20 percent was suggested. Another possibility raised was
commissioning a "coffee table" book featuring major artwork at CAM to be given
with personal memberships of $500 or more.
Mercer listened to these suggestions, knowing that some were unlikely to
receive Board of Trustee approval. These included any proposal to increase ex-
penses for publications/public information (for example, new books and paid
institutional advertising). She had already been informed that expenses for such
activities could not exceed the 2004 expenditure. Improving the member ben-
efit package seemed like a good idea. Increasing restaurant and gift shop dis-
counts, even though 65 percent of the business for both was already on discount,
seemed like a good idea, at least at the margin. Smith said that he would give
this suggestion consideration, but asked that Mercer think further about it in the
context of the overall member-benefit package. Charging a nominal admission
fee for nonmembers also seemed reasonable. Visitor surveys had shown that
50 percent of nonmember visitors said that they would be willing to pay a $2
admission fee for viewing the permanent collection (access to special exhibitions
would continue to have admission fees). Furthermore, members could then be
given an additional benefit, that is, free admission. However, Smith noted that
CAM had always prided itself on free access, and he wondered how the Board of
Trustees would view this suggestion. Additional membership categories below
$50 and for students and senior citizens also seemed to provide new opportuni-
ties to attract segments of the population that had not typically yielded members
Mercer and Smith believed that their initial meeting had produced some good
ideas, but both thought that they had to give these matters further thought. They
agreed to meet again and begin to prepare an integrated plan of action and a pro
forma income statement for 2005.
om with the local
Museum Hentes
究
Case
Coleman Art Museum
MUSEU
Donald Smith, clirector of finance and achinistration of the Coleman Art Museum
In early 2005. Ashley Mercer, director of development and community altas
met to discuss what had transpire at a meeting the previous afternoon. The meet
Ing. attended by the senior staff of the museum and several members of the ward
assigned responsibility for making recommendations that would reverse the situation,
Museum recorded its third consecutive annual loss in 2001, and Mercer and Smith were
of Trustees, and focused on the financial status of the museum. The Coleman An
COLEMAN ART MUSEUM
The Coleman Art Museum (CAM) is a not-for-profit corporation located in Univer
the museum was originally chartered as the Fannel County Museum of Fine Arts
sal City, a large metropolitan area in the western United States. Founded in 1925
and funded by an annual appropriation from Fannel County. In 2000, the name
was changed to the Jonathon A. Coleman Art Museum to recognize the museums
major benefactor, Jonathon A. Coleman Coleman, a wealthy local landowner
and philanthropist, had provided the museum with a sizable endowment. Ae!
cording to the terms of a $25 million gift given to the muscum upon his death
the museum's charter was revised and its name changed. The charter of the mu.
seum stated that its purpose was
To provide an inviting setting for the appreciation of art in its historical and cul-
tural contexts for the benefit of this and successive generations of Fannel County
citizens and visitors
Randall Brent III, the museum director, noted that this charter differentiated CAM
from other art museums. He said:
Our charter gives us both an opportunity and a challenge. By spanning both art
and history, the museum offers a unique perspective on both. On the other hand,
a person can only truly appreciate what we have here if they are willing to be
come historically literate-that is our challenge
In 1997, CAM benefited from a $28 million county bond election, which led
to the construction of a new and expanded facility in the central business district
This case was prepared by Professor Roger A. Kerin, of the Edwin L. Cox School of Business, South-
em Methodist University, as a basis for discussion and is not designed to illustrate effective or
ineffective handling of an administrative situation. The museum name and certain operating data are
disguised and not useful for rusearch purposes. Copyright © 2006 by Roger A. Kerin. No part of this
case may be reproduced without the written permission of the copyright holder.
594
Case
DEMANART
Coleman Art Museum
Donald Smith, director of finance and administration of the Coleman Art Max
MU
In early 2005, Ashley Mercer, director of development and community affairs
met to discuss what had transpired at a meeting the previous aftemoon Theme
ing, attended by the senior staff of the museum and several members of the lower
of Trustees, had focused on the financial status of the museum. The Coleman de
Museum recorded its third consecutive annual loss in 2001, and Mercer and Smith we
assigned responsibility for making recommendations that would reverse the situatie
COLEMAN ART MUSEUM
The Coleman Art Museum (CAM) is a not-for-profit corporation located in Univer
sal City, a large metropolitan area in the western United States. Founded in 1925
the museum was originally chartered as the Fannel County Museum of Fine Art
and funded by an annual appropriation from Fannel County. In 2000, the num
was changed to the Jonathon A. Coleman Art Museum to recognize the museum
major benefactor, Jonathon A. Coleman. Coleman, a wealthy local landowner
and philanthropist, had provided the museum with a sizable endowment de
cording to the terms of a $25 million gift given to the museum upon his death
the museum's charter was revised and its name changed. The charter of them
seum stated that its purpose was
To provide an inviting setting for the appreciation of art in its historical and cul
tural contexts for the benefit of this and successive generations of Fannel County
citizens and visitors
Randall Brent III, the museum director, noted that this charter differentiated CAM
from other art museums. He said:
Our charter gives us both an opportunity and a challenge. By spanning both an
and history, the museum offers a unique perspective on both. On the other hand
a person can only truly appreciate what we have here if they are willing to be
come historically literate that is our challenge.
to the construction of a new and expanded facility in the central business dinero
In 1997, CAM benefited from a $28 million county bond election, which w
This case was prepared by Professor Roger A kerin, of the Edwin L Cox School of Bus
ineffective handling of an administrative situation. The museum name and certain operator
em Methodist University, as a basis for class discussion and is not designed to illustrate ele
disguised and not useful for research purposes Copyright 2006 by Roger A keron No put
case may be reproduced without the written permission of the copyright holder
UMAN ART MUSEUM
of Universal City, the county seat of Pannel County. The location. Six braces
through public transportation. The site was made available for $1.00 from one-
595
thon Coleman's real estate holdings. Ar the dedication of CAM in January 2008
Brent said:
I will always believe that the greatest strength of our new museum is that it was
publicly mandated. The citireas of Pannel County and the vision and geneem
of Jonathon Coleman have provided the setting for the appreciation of an and ma
historical and cultural contexts. As stewards of this public trust the Contenun an
Museum can now focus on collecting significant works of an encouraging schroth
arship and education, and decoding the history and culture of an
MUSEUM COLLECTION AND DISPLAY
CAM has over 15,000 works of art in its permanent collection. However, as with
most museums, CAM does not display all of its collection at the same time be
cause of space limitations. Artworks in the collection are routed, with some per
odically loaned to other museums.
The CAM collection includes pre-Columbian, African and Depressionem a
as well as European and American decorative arts. The art is displayed in differ
ent portions of the museum, where the building architecture accents the display
For example, Depressionera art is displayed in an Art Deco setting of the 1920
and 1930s; decorative and architectural art of the late nineteenth century is dish
played in the Art Nouveau wing. In addition, museum docents provide a histor-
cal context for the artworks during tours.
The CAM collection is open for viewing Monday through Saturday from
10:00 A.M. to 6:00 P.M. and Thursday evenings until 8:00 PM Sunday hours are
from 12:00 noon to 6:00 P.M. There is no charge for viewing the permanent collec-
tion; however, a modest fee of $5.00 to $7.50 is charged for special exhibitions
CAM is also available for private showings and is often used for corporate, foun-
dation, and various fund-raising events during weekday and weekend evenings
Exhibit 1 shows museum attendance for the period 1996-2004.
EXHIBIT 1
Museum Attendance
Total
Museum
Attendance
Special Edition
Proportion of
Amendance
Year
1996
NA
N
1997
1998
NA
NA
3
NS
1999
NA
2000
269.786
247,799
303.456
247.379
607,949
486,009
527,091
468,100
628,472
2001
2002
220,862
140,425
227,70
203.800
284,805
2003
2004
aSpecial exhibitions attendance includes attendance at private comparation Foundation, and
fund-raising events held at the museum.
ERROSTING STRATEGY RETORNILLOON THE CONOLFROG
Museum Organization
the museum in a variety of capacities
The museums organized by function (1) Collections and Exhibitions, (2) Deres
opean Community is and G) Finance and Administration Each fanc-
beaded actor who reports to the museum director, Randall Been
The musum has a sult of ISS employees. In addition, 25 volunteers work z
The Collections and Exhibitions sex headed by Thomas Crane, oversees the
museumsan collections anges special exhibits is responsible for educational
gaming and provides personnel and administrative support for museum
rents that directly involve the artwork. The Finance and Administration
headed by Donald Smith is responsible for the daily operation of the mo-
eum. The museus probe centens (the Skyline Buffet restaurant, parking at
sites and secial exhibicions events are also managed by this function. The de
velopment and Community Afrais seaff, under the direction of Ashley Merce
sensible for marketing public relations, membership, and grants. This forca
som engages is funding for the museum, which provides supplemental force
for general operating sport, endowment, and acquisitions. This function also
handles all applications for foundation, federal state, and local grants.
Museum Finances
Edit2 shows the financial condition of CAM for the period 2002-2004. Total
nues and expenses during this period are shown below:
$10.94.110
11.11825
$385.9153
2003
57.83.712
-96-550
2002
$8.698.121
8.920.6
($ 226.555
(5
The three consecutive years of losses followed seven consecutive years of either
breakeren or probable sanas. The cumulative loss of 795,066 had depleted the
During a recent Board of Trustees meeting several observations and projec-
sons were made the indicated that the museum's financial condition needed
1. The appropriation from Panel County would decline. Whereas the
con appropriated about $2 million annually to CAM, the museum
could expect no more than $16 million in county appropriations in 2005
and for the foreseeable future.
2 Low interest rates in 2008 and 2004 indicated that earnings from CAN
endowment and investments would probably remain flat or decline.
2. Income for grants and other contributions in 2004 were extraordinan
and it was unlikely that the same amounts would be forthcoming in 2005
4. Membership revenues were down for the fifth consecutive year. Member
sihip represented the single largest source of revenue for the museum
5. Income from day activities those that were intended to produce
proft-comed to show a positive contribution to museum operacions
Secal abitions and events were very profitable. Nevertheless limited av
bit of special athibitions in 2005. a declining number of scheduled even
ancing costs for insurance is an example) indicated that the revenues from
sach its old probably decline and costs increase in 2005. The Sky
Case
Coleman Art Museum
COLEMAN ART MUSEUM
CHATRONARNING MINNIERON UN
ating at about break even
Buffet restaurant, gift shop and parking, and the Masummat we
MUSEUM MARKETING
As director of development and communications Ashley Mercer was to
sible for marketing at CAM. Her specie pamiilities Tolurem och
image of the museum, increasing munum visitation, and buildmg museum
berships Reflecting on her responsibilities, she said
In reality, museum image, visitation, and membership are intermmple Images
influences visitation and membership Visitation is apten samewhere
ship, but membership seems to also are visitation and, ma sukai
the image of the museum
Museum Image
Interest in the public image of CAM degan soon atter the new facility was bei
icated. The new four story building, simard downtown adiacem to skusco
ers, was occasionally referred to as the "marhi box by its cities, stes the
building facade contained Talian marble. When asked abom im terem
commented:
It is basically correct to say that in the mind of the public Chusmors
There is nothing about this building the sum a museum.ar Cant
There are a lot of people that are not interested in high outure and think this is
drive-in bank or an office building
Most art museums in America have a problem with image Om ai the things
that makes me mad is that people think there is something wrong with them
seum. CAM is one of the most public in the country, and more onenie
on the membership contribution than any other museum mass
endowed and underfunded from reliable public funds. Im the Amer
sociation of Museums reports that onts abam 10 percent of Americans
art museums have enough income from their endowmem to the
ing costs. Nevertheless, this institution has chosen to be public, with
and this is very noble. It is wonderful that the museum has acte amo
to an agglomeration of very nich people
This museum has more character than it thinks It has he has the rest
anced collection between Western and mon Westman af any muscum
country. We have not chosen to sell or promote the unique aspects of the
tion or the museum's emphasis on historical contem. What we have are the muk
ings of an institution that is very different from other muscuns, ane w
be able to make that into an advantage Tuther than apologia
Other staff members believed either that an image sisted her was
effort to create an image for itself. According to Mercer
Based on our marketing research, I think there are two distinct altfor
ages. One is a non-image. People don't know when the museum The
don't know what we have to offer an the way of lunch, dimesseramah
movies, etc. They are not familiar with our collections. They are stil
however, that their commumity has a beautiful art museum
The other images that we are and for specific people. This tuge
ably based on our membership Abox 5 percent members as
educated compared to 70 percent of the counts panna
60 percent have household comes in. 70.000 (antra
for the various publics the museum served or that CANI had a mac